tv Nightly Business Report PBS November 5, 2016 1:00am-1:31am PDT
♪ this is "nightly business report" with tyler mathisen and sue herera. payday. wages are picking up. the unemployment rate is ticking down. today's jobs report seal the deal for a rate hike in december? nine days of losses. the s&p 500 has its longest losing streak in 36 years. how should you invest? our market monitor has some ideas. and hero's vodka. meet the former marine turned entrepreneur who is raising a glass and building a company to help other vets. those stories and more tonight on "nightly business report" for friday, november 4th. good evening, everyone. welcome. it is the worst losing streak for stocks since 1980. more on that in just a moment. but we begin with jobs and wages. and if you have been thinking
about asking for a raise, now may be the time. today's employment report showed a pickup in average hourly earnings, as businesses raise pay in order to attract a smaller pool of available workers. according to the labor department, the economy added 161,000 jobs last month. the unemployment rate ticked lower to 4.9%. average hourly earnings rose .4% to the fastest annual pace since the end of the great recession. hampton pearson has more on the last jobs report before the election, and what it may mean for wall street, main street and the fed. >> reporter: there was an october surprise in the final jobs report before the presidential election. a pay raise for american workers. in the last 12 months, average hourly earnings up 2.8% to just under $26 an hour. the biggest pay raise in seven years, according to the labor department. >> the workers have been looking for a meaningful raise for quite
some time. they deserve that raise. and we're seeing this sustained evidence they're getting it. >> reporter: october hiring led by 43,000 new hires in professional and business services. which includes mostly higher-paying jobs in engineering, accounting and information technology. health care also continues to be an engine of job growth, adding 39,000 new workers. the unemployment rate dipped to 4.9%. the biggest disappointment, manufacturing. which cut 9,000 jobs last month, and more than 50,000 in the past year. >> we're getting service employment, but not manufacturing employment. we're getting the lower-paid wages rather than the higher-paying wage industries hiring. >> reporter: the combination of job growth with higher wages and signs of increased consumer suspending could trigger the boost in inflation the fed has been looking for. >> i think if all of the inflation pressure we get comes from wages, it's a great thing,
solid thing for the u.s. economy, and companies have plenty of margin, you know, room in their margins to absorb slightly higher wages and especially if it leads to greater consumption. >> reporter: most fed watchers say today's job report increases the odds for a rate hike in december. the biggest remaining x factor, market reaction to the outcome of the presidential election. for "nightly business report," i'm hampton pearson in washington. and speaking of the fed reaction today, two federal reserve officials commented on the labor market. vice chair stanley fisher said the economy is close to full employment and raised the possibility that the fed could overshoot its 2% inflation target. separately, the president of the atlanta fed said the bar is now high for the central bank not to increase interest rates in december. so let's turn now to dean macke for more analysis on today's jobs report and what he thinks it may mean for the fed. he is chief economist at .72
asset management. dean, nice to have you here. welcome. >> thank you. >> let's start, first of all, with your analysis of the report. i noticed there were upward revisions in two prius reports, which strengthens those certainly. all in all, it seems to look pretty good. >> that's right. the job gains are relatively steady. they're at 175,000 on average over the past three months. that's more than enough to keep pushing the unemployment rate down. that will please the fed. and what we're finally seeing is that fall in the unemployment rate is leading to substantial wage gains. and so this is exactly what the fed has been looking to happen. and i do think this keeps the fed on track for a hike in december. >> how material is the drop in the labor force participation rate? in other words, you can have a falling unemployment rate if jobs go up, or if labor force participation goes down. >> well, the labor force participation rates been
trending down for quite some time now. and that's mainly being driven by demographics. the population getting older, more people retiring. that's going to continue for another decade or so. so i think that -- the up or down month-to-month is less important than that trend. the trend is actually slightly up over the past year, as some people have come back into the labor market. but i think the unemployment rate means what it usually does. and that's why we're seeing wage gains pick up. >> there are those who say, though, there are a lot of disenfranchised workers who have left the labor force, and therefore they are not counted. and then that could skew the number. >> there certainly are those people out there. but what the numbers tell us is that the vast majority of people that are not working are those who say they do not want a job at this point. most of those people are retired. or doing other things. so there's -- i don't think there is this large pull of
people ready to jump back into the labor market the minute wage gains pick up. >> it's interesting. i have thought about this a lot. being a baby boomer on the cusp of the age where some people retire, i'm not retiring a long time, dean. but i've thought that labor force participation was being pushed by people leaving voluntarily, because they were retiring. one of the fed governors said that the bar is -- kind of curious low accuse here, the bar not raising interest rates, basically means we're going to raise interest rates. do you see it that way for december? >> that is very likely. i think the only thing that could knock the fed off course were if the results of the election, for example, led to a lot of market uncertainty, a lot -- markets in chaos. that kind of environment, the fed doesn't particularly want to raise rates into. if the data stay where they are, the markets are doing okay, then the fed almost certainly will raise rates in december. >> all right, dean. thank you so much. have a great weekend. dean macke with .72 asset
management. the trucking industry is one part of the economy that is not creating jobs. and experts are paying close attention to what's happening in this enormous and vital sector. morgan brennan has more. >> reporter: u.p.s. and fedex can't hire enough workers for the holiday season. it's another story for the companies hauling freight. the labor department reporting the manufacturing sector shed 9,000 jobs in october. including several thousand in transportation equipment. it's the latest sign the freight slump isn't letting up and comes as demand continues to plunge for new trucks. market forecasts says october orders for tractor-trailer trucks tumbled nearly 50% from a year earlier, extending a month-long route of the weakest activity since the recession. >> the orders we saw in october, the just below 14,000 unit orders was particularly weak when we seasonally adjusted as october is typically the first
month of the peak order season. >> after strong 2014 trucking needs ordered new vehicles that never quite materialized as commodity prices and manufacturing nose dived. that led to too many vehicles on the road and just as broader economic growth slowed. but this is typically the busy time. when trucking executives assess their fleets and place orders for the upcoming year. instead, the biggest firms, including warner and swiss transportation has been pulling trucks, hundreds of them, off the road. while act research expects to see some modest improvement in 2016's final two months, it still doesn't bode well for next year. >> we certainly haven't seen any indications that frayed is coming back around, and i think for improved frustraeight we re need to see better commodity pricing which is driving the machinery sector. the number of widgets that have to be moved when building big machines generates a lot of
freight that the truckers are hauling. >> the slump is also affecting earnings. this week, transmission forecasts and cummins told analyst the engine maker is hearing from, quote, lots and lots of fleets they're delaying purchases. with nearly 70% of goods in the u.s. moved in its way, trucking activity is considered a leading indicator of u.s. economic growth. making reports like these all the more pressing. for "nightly business report," i'm morgan brennan. on wall street, stocks slumped into the close. dragging the s&p 500 to its ninth consecutive decline. that's the index's longest losing streak in 36 years and it was a down day all around on continued uncertainty surrounding the upcoming presidential election. so when all was said and done, the dow jones industrial average lost 42 points to 17,888. the nasdaq was off 12, and the s&p 500 fell three. for the week, all of the major indexes fell.
wells fargo sales scandal could extend to its brokerage unit known as wells fargo advise advisers. in a letter to the bank ceo, three senators questioned the company's disclosures about the dismissal of workers from that you want unit. so far, wells has said the problem is isolated in its retail banking business. drug makers are feeling the heat. two senior lawmakers sent a letter to the justice department requesting an investigation into possible collusion. this follows a report we told you about yesterday of a probe into price fixing at a number of generic drug-makers. meg tirrell has more. >> reporter: senator bernie sanders and congressman elijah cummings are asking u.s. regulators to investigate whether makers of insulin colluded on pricing. >> we're early in the pricing debates. there have been more than 500 drugs that have raised the price more than 15% so far this year. there are a lot of them. and clearly, anyone who is raising price too much, that
should be something that people look into and have some sort of say in that. secondly, if you have collusion, everyone agrees. if there is known collusion, go after it. >> reporter: sanders and cummings highlight four companies in their letter to u.s. attorney general loretta lynch. all makers of drugs for diabetics. a triple in the price of insulin from $231 to $736 per year for each patient. they also note identical increases for drugs like atlantis rising 13 times since 2009. they write, we are concerned the potential coordination by these drug makers may not simply be a case of shadow pricing, but may indicate possible collusion. and we believe this egregious behavior warrants a thorough investigation. the drug makers disagree, all saying in statements, they set prices independently. in compliance with the law. merck pointed out, it doesn't
even make insulin. and all four point to discounts on their drugs keeping actual prices lower. a familiar theme as drug companies try to shine the light on the rest of the system. specifically on pharmacy benefits managers, or pbms, which negotiate those discounts. >> everyone is asking for more transparency. and if there is going to be more transparency, one of the places it has to come up is with the pbms. >> industry watchers say regardless who wins, the political focus on drug prices will continue. for "nightly business report," i'm meg tirrell. still ahead, finding opportunity. a five-star fund manager who is outperforming the market will tell you which stocks he likes right now. ♪
samsung is recalling nearly 3 million top-loading washing machines following reports of injuries. the consumer product safety commission said the top part of the machine can detach from the chassis during use. there have been reports of more than 700 excessive vibrations, and nine reports of injuries, including a broken jaw. the company recently sued by customers who allege their machines explode during normal use. this follows the recall of 2.5 million samsung galaxy note 7 smartphones. china's wanda production company plans to buy dick clark productions for $1 billion. this marks the first move into tv production, and as we have reported, it follows a big push by the chinese conglomerate into hollywood. the group is run by china's richest man, and opens the amc theatres, legendary
entertainment production company, and recently announced a partnership with sony. the market for competitive gaming is growing rapidly, and active vision's blizzard is making a creation of a professional e-sports league. and as julia boorstin reports, it's getting the attention of some nfl owners. >> reporter: active vision blizzard's overwatched game has been a run-away success since it launched in may. more than 20 million players around the world. and now the game-maker is making a move to tap into growing demand for e-sports. creating a gaming league for overwatch, selling franchise teams to compete in that league, starting next year. >> active vision has several titles very well-suited for e-sports. and now they're going to be able to take advantage of that by creating an e-sports league offering broadcast rights and advertising, as well as creating more revenue from in-game purchases. believe it or not, people are
going to be buying jerseys and other virtual goods. >> reporter: active vision's overwatched teams are drawing a range of interests, including from traditional sports team owners. patriots owner, robert kraft and rams owner, stan kroenke, among those who attended the presentation to prospective team owners today. >> welcome to blizzcon 2016. >> the presentation about the new league held at blizzcon, active vision's annual convention that drew a soldout crowd of 25,000 gamers and another 10-million plus people streaming online and watching the e-sports competition under way. new zoo says e-sports has nearly 150 million fans, with nearly as many occasional viewers. as this multibillion dollar business in the making is starting to steal viewership, away from traditional sports viewing. and activision is particularly well-positioned. >> e-sports is critical for activision in the sense that it's a way for them to generate significant incremental revenue. so our estimate is that they're
going to generate potentially as much as $300 million or more in revenue over the next few years. >> it's an area where activision has been investing, buying major league gaming in january to live stream tournaments, like a september call of duty championship, as if it were a traditional sport. to try to build a business at the same scale. for "nightly business report," i'm julia boorstin in los angeles. medicare helps humana top estimates, and that is where we begin tonight's market focus. a health insurer said an uptick in membership lifted profit and revenue above expectations, a unit that sells plans to the elderly and people with disabilities. shares finished up better than 1% to $167.42. regeneron pharmaceuticals posted a higher than expected profit thanks to sales of its cholesterol medication and lower tax bill. the biotech company also saw a revenue increase, but those results were shy of estimates. shares rose more than 1.5% to $341.39.
and allaire said its medical equipment unit has its medicare enrollment revoked following findings that the unit submitted claims for deceased patients. medicare doesn't like that. the company is appealing the decision. separately, they posted weaker than expected earnings. allaire fell 14.5% to $36.10. the analytics company, nielson, be said its previously released data regarding cable viewer estimates for the month of november was accurate. included in those estimates was cable channel espn, which saw a viewership decline of more than 600,000, the worst performance in that network's history. disney disagrees, telling cnbc, the data is, quote, an anomaly, and inconsistent with other respected third party analysts. disney fell to 92.35.
diagnosis and berkshire hathaway results being helped in the conglomerates energy divisions. net income saw a decline. the shares fell slightly. they finished down fractionally to $214,545. and now to our market monitor, who has some names he says you might want to own if you're worried about stock market volatility. this is his first time joining us on the program. he's allen bond, the top-performing manager of the jenson quality growth fund. it is up nearly 8% this year. allan, welcome. good to have you with us. let's begin with this pesky losing streak we're in the midst of, with the s&p and the other market averages. is this the start of something bigger, worser? >> well, it certainly is unprecedented for a long time. this is the first time in 30 years that we have seen the market sell off for eight straight days and probably some
election uncertainty in there. the election is obviously tightening. the question for us, is stock pickers, what kind of stocks do we want? it comes back to quality growth stocks. stocks with free cash, higher returns on capital and consistent business models that can thrive regardless of the geopolitical environment. >> all right. have you been adding to positions? let's talk about the stocks you're recommending tonight. waters corporation. you say it's an all-weather company that can hold up if you're concerned about volatility. and we certainly are seeing that right now. >> yeah. waters is a bit of a sleepy company, but one of the world leaders in the scientific tools used by pharmaceutical businesses to conduct research and quality control testing on both branded and generic drugs. and it's a business model defined by high customer switching costs. half the company's revenues are somewhat recurrent in nature, generate free cash, have been around a long time, a consistent company. we think it's a great company for any environment. the stock sold off last week after earnings.
so we think the entry point is very attractive. >> your second pick is also -- has revenues that are sort of recurring in nature. sounds like a theme of yours. echo lab. why do you like? >> sure. so ecolab is the world's leading supplier of sanitation chemicals sold to hotels and restaurants for their cleaning needs. they dominate the world's market, twice as big as their nearest competitor and a scale business, so that's important. what's interesting about ecolab right now, they do get some sales from energy in markets, and that we see that business with a oil market stabilizing. we see that business troughing and we think the company is doing well for revenue and earnings as we enter 2017. >> let's move to pepsi. i was kind of surprised to see it on the list, but on the other hand, you say that, you know, it's a global brand, not just a domestic brand. and so it has revenue from a lot of didn't areas. >> yeah. pepsi is a great one for that volatility thing you were talking about at the opening here. very well-known company.
deep competitive advantages from brand strength, channel strength throughout the world. very diversified business model. we like it for free cash flow attributes. its consistency, raised dividend for 43 consecutive years so a very steady story. in volatile times, if we're concerned about volatility, it's a stock that has shown it can hold up very well in volatile markets. the long-term play for us comes back to its quality. >> all right. allen, thank you so much. have a good weekend. allen bond with jenson qualities growth fund. coming up, it's made in the sioux usa and he had the idea to help other vets. ♪
veterans day is a week from today, and u.s. military vets own some 2.5 million businesses, generating more than $1 trillion in sales each year. vets have started companies like walmart, nike and fedex. but one ex-marine in nashville, tennessee, got the bright idea to make it his business to give back to vets and their families. full-time. ♪ travis mcveigh considers himself pretty lucky. as a marine, he was chosen for the presidential honor guard. serving in the late 1980s and early '90s. his two best friends weren't as lucky. richard gaston went on to become an indiana state trooper but was killed in the line of duty. and thomas rafjohn, army reservist, called to active duty and died in afghanistan. >> it was just devastating. i go through those emotions when you lose someone through grief,
anger, feeling guilty for not being there, but finally inspired to do something. >> reporter: mcveigh spent a total of eight years in the marines and 15 working at a tennessee tire factory. on the side, he dabbled at home making his own vodka. he dreamed of selling it, and donating money to causes that helped military veterans. but why vodka? >> vodka, you can make today and sell tomorrow. you don't have to age it. it's gender-neutral, seasonless, and outsells all the other spirits combined. >> reporter: mcveigh spent more than a year and about $80,000 tweaking bottle designs, a sales pitch, and his corn-based recipe. he says corn makes a smoother vodka, but getting his heroes vodka into stores was no simple feat. so he called a local expert, ronlt lipman, whose family founded the first distributor of jack daniels back in the 1930s. >> robert answered his phone that afternoon and said i've got 100 different vodkas in my white
house but i'll give you 20 minutes since you're a veteran. >> >> 20 minutes is all it took. >> what always drove me, my friend, if they could give their lives for this country and the men and women that serve every day, i can do this. >> reporter: lipman was hooked. so he invested in here owes, betting his story would sell. he went into production on veterans day in 2011. in early 2012, 300 national retailers and restaurants began selling it. now available in 15 states, heroes sells for about $15 a bottle. >> when i first sat down and spoke to travis, i said, man, you know, you're climbing a pretty steep hill. >> reporter: in 2013, leonard phillips became the first new york city retailer to carry heroes. >> he was not going to be deterred. he said, i'm going to do this. and i said, well, you've got my support. >> reporter: 15,000 cases, and close to $1 million in sales later, heroes expects to be
profitable next year. but even without profit, heroes is already donating. nearly $60,000 so far, mostly to am vets, a nonprofit chartered by congress to help american veterans and their families. and while mcveigh's story sells, he's heard from a few detractors, too. some say he's exploiting his military background. others make him painfully aware of the alcohol issues faced by so many vets. >> we're just like anyone else. some people have a problem with alcohol, some people don't. i believe in freedom of choice and also tell people, if you have a problem with alcohol, i don't want you to buy my product, period. >> reporter: just this week, mcveigh was named veterans' business advocate of the year by the national veteran-owned business association. an honor, as he answers his new call of duty. >> what i tell people, never start a business just to make money. start a business to make a difference. cheers. >> good advice there. in the future, heroes plans to donate 10% of its profits.
mcveigh, who also wrote a book about country singers who serve in the u.s. military, hopes to have vodka for sale in 30 states next year. he is entering a crowded marketplace. there are a lot of vodkas, but his price point, $15 a bottle. >> i hope some states that don't have it, see your report and do it. that does it for us for "nightly business report," i'm sue herera, thanks for joining us. >> i'm tyler mathisen. thanks for joining us, and we'll see you monday, the day before election day.
captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org gwen: hillary clinton and donald trump are racing the clock, polls are tightening and voters just want it to be over. i'm ed o'keefe tonight. >> i'm not on the ballot but fairness and justice is on the ballot, progress is on the ballot, our democracy is on the ballot. eddie: down to the wire, trump and clinton delivering closing arguments on why they should be president. >> if donald trump were to win this election we would have a commander in chief who is completely out of his depth and whose ideas are incredibly dangerous or maybe heaven forbid, start a real war instead